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Wed Mar 12th 11:27 AM | Rating: 0 0
Commented on:
MacroShares Oil Funds Offer Arbitrage Opportunity

Dear Prince and Mr. Gary,
Your analysis is detailed and the strategy sounds compelling. I did some simple math on my spread sheet. Athough Mr. Gary keeps saying the premium should go away, what I found is: the premium was 52% of NAV a month ago and today DCR is traded at $10 with a 160% premium! The premium actually goes along with the higher and higher crude oil price.
I really wonder what's going on here. Are DCR holders aware this fact: If oil is beyond $111 for three days this ETF will liquidated? They will lost all the premium. On the other hand, if the oil goes down, they are not likely gain as much as another 100% of NAV.
Maybe my second argument is debatable. Who knows. However I think it's not a favorable bet to hold DCR in today's circumstance -the oil price is over $109, the porbability that it goes higher than $111 is pretty high.
As Prince and Mr. Gary suggested, it is favorable to short DCR as long as you don't worry the premium would explode during that exciting three days. But again, who knows the market.
Dear Prince and Mr. Gary, please let me know your thought about this fact of increasing premium. Thanks!
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Wed Mar 12th 11:21 AM | Rating: 0 0
Commented on:
Arbitrage Opportunities with Oil ETFs

Dear Prince and Mr. Gary,
Your analysis is detailed and the strategy sounds compelling. I did some simple math on my spread sheet. Athough Mr. Gary keep saying the premium should go away, I found a month ago the premium was 52% of NAV and today DCR is traded $10 with a 160% premium! The premium actually goes along with the higher and higher crude oil price.
I really wonder what's going on here. Are DCR holders aware this fact: If oil is beyond $111 for three days this ETF will liquidated? They will lost all the premium. On the other hand, if the oil goes down, they are not likely gain as much as another 100% of NAV.
Maybe my second argument is debatable. Who knows. However I think it's not a favorable a bet to hold DCR in today's circumstance which the oil price is over $109.
It is favorable to short DCR as long as you don't worry the premium would explode during that exciting three days.
Dear Prince and Mr. Gary, please let me know your thought about this increasing premium. Thanks!
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